Sanisvara Nethaji Rayer Rajaji triggered protests last month when he called the United Malays National Organisation (UMNO) "celaka" -- a Malay word meaning "damned" or "accursed" -- in comments in the assembly of the northern state of Penang.
He said he was asked to report to police today and was arrested on arrival before being released on bail.
"I will be charged tomorrow morning for sedition. There is no difference, I stand by what I said and that's it," he said of the remarks that also led to some UMNO members invading the state assembly.
In other legal moves, opposition leader Anwar Ibrahim was convicted in March of sodomy in a case he has described as politically motivated to ruin his career.
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Prime Minister Najib Razak pledged in 2012 to abolish the Sedition Act as part of promised reforms intended to halt a slide in support for his long-ruling coalition.
But after retaining power with a weak showing in a 2013 election, Najib is believed to be under pressure from disgruntled conservatives in his Muslim ruling party to backtrack on reform.
The government has said it remains committed to replacing the sedition law -- which carries a maximum prison sentence of three years -- but has given no timeframe.
But media quoted the de facto law minister Shahidan Kassim as saying that "you can't run away from the Sedition Act".
"UMNO represents the Malays," he was quoted as saying when asked if it was a crime to insult the ruling party.
Malays are the majority community in multiethnic Malaysia.
Rights groups have condemned the repeated use of the Sedition Act and other repressive laws against opposition figures over the past year.
Najib in early June sued Malaysiakini.Com, a leading news website known for its often harsh criticism of the long-ruling government.